An official website of the United States Government Here's how you know

Official websites use .gov

A .gov website belongs to an official government organization in the United States.

Secure .gov websites use HTTPS

A lock ( ) or https:// means you’ve safely connected to the .gov website. Share sensitive information only on official, secure websites.

Oman

Executive Summary 

Oman’s location at the crossroads of the Arabian Peninsula, East Africa, and South Asia and in proximity to larger regional markets is an attractive feature for potential foreign investors. Some of Oman’s most promising development projects and investment opportunities involve its ports and free zones, most notably in Duqm, where the government envisions a 2,000 square-kilometer free trade zone and logistics hub. With a “friends of all, enemies of none” foreign policy, Oman does not face the external security challenges of some of its neighbors. Oman’s domestic political situation remains stable, despite increasing economic pressure and the need to create employment for young Omanis.

Oman’s economy and government finances rely heavily on oil and gas revenue. High energy prices in 2022 are improving Oman’s economic prospects but will not immediately overcome the effects of years of relatively low energy prices, weak economic growth, budget deficits, and the impact of the COVID-19 pandemic. The government announced a medium-term fiscal plan in November 2020 to fix its heavily indebted finances by cutting down on spending and raising revenues, primarily through taxes. Some of the measures negatively affected capital flow, and in an economy dependent on state spending the suspension or cancellation of government projects during Oman’s economic contraction further hit the struggling private sector.

Government leadership recognizes these challenges and is working to improve Oman’s investment climate and to achieve its economic development goals under Oman’s Vision 2040 development plan. Omani Sultan Haitham bin Tarik al Said, who assumed the sultancy in January 2020, has prioritized foreign direct investment (FDI) attraction as an imperative to boost local job creation, particularly as COVID-19-related restrictions have loosened. Toward this end, Oman is in the process of developing further advantages for foreign investors, including a program of tax and fee incentives, permissions to invest in several new industries in the economy, expanded land use, increased access to capital, and labor and employment incentives for qualifying companies. In September 2021, Oman allowed expatriate residents with work visas to own residential units and offered long-term residency visas to attract investors. Five- and 10-year renewable residence visas are available to foreign investors in the tourism, real estate, education, health, information technology, and other key sectors. In March 2022, Oman announced that it would reduce the cost of foreign worker permit fees by up to 85 percent, reversing a hike in the fees it had implemented in June 2021 that some businesses had found problematic.

The success of Oman’s reform efforts will depend on its ability to open key sectors to private sector competition and foreign investment, minimize bureaucratic red tape, pay off its overdue bills, balance its desire for “Omanization” with the realities of training and restructuring its work force, and translate its promises of economic reform into increased FDI flows and job creation. The government also needs to undertake more fundamental reforms for investment such as making its tender system transparent, increasing access to credit, and speeding up approvals for new businesses.

Sultan Haitham and his government are actively courting FDI into many of its sectors. In February 2021, the Ministry of Finance signed three memoranda of understanding with the Saudi Fund for Development to finance several projects amounting to about $244 million. In January 2022, Oman also signed a Sovereign Investment Partnership with the United Kingdom, its largest FDI partner, to facilitate joint investments in both countries.

Sultan Haitham and his government are also seeking to make fuller use of the 2009 U.S.-Oman Free Trade Agreement (FTA), under which U.S. businesses and investors have the right to 100-percent ownership of their companies and can import their products to Oman duty-free. U.S. companies operating in Oman sometimes raise concerns over a lack of clarity and consistency on business license and visa renewal criteria, as well as an increase in associated costs.

The top complaints of businesses relate to requirements for hiring and retaining Omani national employees and a heavy-handed application of “Omanization” quotas. Payment delays to companies that completed work on government infrastructure projects are also a problem across various sectors. Smaller companies without in-country experience or a regional presence face considerable bureaucratic obstacles conducting business here. Beginning in 2020, the government also temporarily ceased the issuance of most new project awards and purchases to curb expenditures.

Companies created under Oman’s new Foreign Capital Investment Law (FCIL), promulgated in 2020, have come under the government’s radar and the Ministry of Commerce, Industry and Investment Promotion (MOCIIP) is re-evaluating investor visas that it issued in 2020. The FCIL removed minimum-share capital requirements and limits on the amount of foreign ownership in an Omani company.

Table 1: Key Metrics and Rankings
Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2021 56 of 179 http://www.transparency.org/research/cpi/overview
Global Innovation Index 2021 76 of 131 https://www.globalinnovationindex.org/analysis-indicator
U.S. FDI in partner country ($M USD, stock positions) 2020 USD 197 https://apps.bea.gov/international/factsheet/ 
World Bank GNI per capita 2019 USD 14, 170 http://data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment 

2. Bilateral Investment Agreements and Taxation Treaties 

Although Oman does not have a bilateral investment treaty (BIT) with the United States, the FTA contains a chapter governing investment.  Oman has 28 BITs, with the following countries:  Algeria, Austria, Belarus, Bulgaria, China, Croatia, Egypt, Finland, France, Germany, Iran, Italy, Japan, Jordan, Republic of Korea, Lebanon, Morocco, Netherlands, Pakistan, Singapore, Sudan, Sweden, Switzerland, Tunisia, Turkey, United Kingdom, Uzbekistan, and Yemen. Oman does not have a bilateral taxation treaty with the United States, but it has signed double taxation treaties with 35 countries. More information can be found on Oman’s Tax Authority’s website: https://tms.taxoman.gov.om/portal/double-tax-agreements .

Oman is a member of the Organization for Economic Cooperation and Development’s (OECD) Inclusive Framework on Base Erosion and Profit Shifting. In October 2021, Oman agreed that certain multinational enterprises (MNEs) will be subject to a minimum 15% tax rate, effective from 2023.

4. Industrial Policies 

5. Protection of Property Rights 

6. Financial Sector 

7. State-Owned Enterprises 

State-owned enterprises (SOEs) are active in many sectors in Oman, including oil and gas extraction, oil and gas services, oil refining, liquefied natural gas processing and export, manufacturing, telecommunications, aviation, infrastructure development, and finance.  The government does not have a standard definition of an SOE but tends to limit its working definition to companies wholly owned by the government and more frequently refers to companies with partial government ownership as joint ventures.  Almost all SOEs in Oman fall under the Oman Investment Authority (OIA). The government does not publish a complete list of companies in which it owns a stake.

In theory, the government permits private enterprises to compete with public enterprises under the same terms and conditions with access to markets, and other business operations, such as licenses and supplies, except in sectors deemed sensitive by the Omani government such as mining and telecommunications. SOEs purchase raw materials, goods, and services from private domestic and foreign enterprises.  Public enterprises, however, have comparatively better access to credit.  Board membership of SOEs is traditionally composed of various government officials, with a cabinet-level senior official usually serving as chairperson.  Especially since the government reorganization began in August 2020, the government is making efforts to include private-sector officials on SOE boards.

OIA has made efforts to enhance the efficiency and governance of SOEs, including by publishing audited financial statements, assessing each entity’s business strategy and public policy considerations, and mitigating financial exposures. OIA is developing a code of governance for SOEs. It restructured several companies under its supervision and formed new boards of directors drawing from both the public and private sectors. SOEs receive operating budgets, but, like budgets for ministries and other government entities, the budgets are flexible and not subject to hard constraints.  The information that the Omani government published about its 2022 budget did not include allocations to and earnings from most SOEs.

8. Responsible Business Conduct 

Corporate social responsibility (CSR) is becoming increasingly prevalent among local and foreign companies operating in Oman, and several companies have dedicated CSR departments and programs. While CSR programs may differ, they invariably seek to engender goodwill in the communities they serve and to provide a social benefit.  Examples include competitions in elementary and secondary schools for academic performance and artistic skill; sponsorship of charitable, academic, and social events; training programs; entrepreneurship incubators; and the organization of women’s or tribal empowerment events.

The press covers consumer rights violations, mostly the sale of expired food or counterfeit medicine or car parts.  A general culture of accountability is prevalent, as is a sense that companies who violate CSR tenets will suffer in business and market share.

No independent consumer organizations that promote CSR exist. However, many business associations, including the Oman American Business Center (the local U.S. Chamber of Commerce affiliate), pursue CSR initiatives as a part of their annual activities.  Companies generally follow CSR guidelines set forth by the Organization for Economic Cooperation and Development. Oman’s Council of Ministers directs state-owned companies to allocate a portion of their CSR budgets to support training programs and the employment of Omani citizens. Additionally, each government ministry has a department dedicated to facilitating CSR compliance and initiatives.  The government has not waived regulations promoting CSR to attract foreign investment. In December 2021, MOCIIP issued a mandate instructing private companies to allocate 20 percent of their CSR budgets to the state-funded charitable organization, the Oman Charitable Association.

9. Corruption 

U.S. businesses do not generally identify corruption as one of the top concerns of operating in Oman.

The Sultanate has the following legislation in place to address corruption in the public and private sectors:

1) The Law for the Protection of Public Funds and Avoidance of Conflicts of Interest (the “Anti-Corruption Law” promulgated by Royal Decree 112/2011). The law predominantly concerns employees working within the public sector.  It is also applicable to private-sector companies if the government holds at least a 40-percent share in the company, or in situations where a private-sector company engages in punishable offenses with government bodies or officials.

2) Minimum sentencing guidelines for public officials guilty of embezzlement are three years, per the Omani Penal Code.  The definition of “public officials” includes officers of parastatal corporations in which the Omani government has at least a 40-percent controlling interest.  The new penal code may make Oman seem more investment friendly, by virtue of modern references to corporations as legal entities, as an example.  However, its language on money laundering remains ambiguous and descriptions of licit and illicit banking are unclear, potentially contributing to confusion about investment regulations.

A lack of domestic whistleblower-protection legislation in Oman has resulted in the private sector taking the lead in enacting internal anti-bribery and whistleblowing programs.  Omani and international companies doing business in Oman that plan to implement anti-corruption measures will likely find it difficult to do so without also putting in place an effective whistleblower-protection program and a culture of zero tolerance.

Ministers are not allowed to hold offices in public shareholding companies or serve as the chairperson of a closely held company.  However, many influential figures in government maintain private business interests and some are also involved in public-private partnerships.  These activities either create or have the potential to create conflicts of interest.  Oman’s Tender Law precludes Tender Board officials from adjudicating projects involving interested relatives to “the second degree of kinship.”

Oman has stiff laws, regulations, and enforcement against corruption, and authorities have pursued several high-profile cases.  The Courts have signaled that they will not tolerate corruption.  In its annual report released in February 2021, the State Audit Institution (SAI) reported that, pursuant to its annual audit of government departments, Oman’s Public Prosecution sentenced several government employees to imprisonment, fines, dismissal from jobs and permanent bans on holding further public jobs due to charges of bribery. SAI reported 2,767 cases of administrative and financial irregularities in 2020, a 51-percent increase over 2019.

Oman joined the United Nations Convention Against Corruption (the “UNCAC”) in 2013.  Oman is not a party to the OECD Convention on Combating Bribery.

10. Political and Security Environment 

Oman is stable, and politically motivated violence is rare. Oman’s first head of state transition since 1970 occurred on January 11, 2020, with the peaceful rise to power of Sultan Haitham bin Tarik, in accordance with Oman’s Basic Law of the State. Omani law provides for limited freedom of assembly, and the government allows some peaceful demonstrations to occur. Oman experienced Arab Spring-related demonstrations in 2011. These were far smaller than in other Arab countries, although demonstrations in the northwestern Omani city of Sohar resulted in casualties, property destruction, and the blocking of pedestrian and vehicle access to the city’s port. In recent years, high youth unemployment has been among the Omani government’s most significant concerns, and the government prioritizes providing employment opportunities for Omani nationals. On regional security, Oman is committed to securing its border with Yemen, ensuring that Yemen’s instability does not affect Oman, countering illicit trade and terrorist travel, and supporting freedom of navigation through its strategic territorial waters in the Strait of Hormuz.

11. Labor Policies and Practices 

Oman’s labor market is a significant factor for foreign business and investors to consider. Sultan Haitham made clear in his first royal decrees and nationally televised speeches that addressing unemployment among Omani nationals would be a top priority.

Unemployment figures in Oman vary, but the most severely impacted demographic is young men and women.  No statistics about employment in the informal economy are available, but this sector is primarily limited to agriculture and fishing in rural areas.

Omani national private sector employees often work in administrative or managerial roles carved out for them through Omanization.  Most drivers and secretaries are required to be Omanis across all sectors.  In general, a surplus of workers exists in desirable fields, such as information technology and engineering.  A shortage of workers prevails in labor-intensive sectors, particularly construction, due to Omanization laws curbing the number of foreign workers who can be brought in to fill these roles.  Foreign workers play a significant role in the Omani economy. Indians and Bangladeshis alone constitute approximately half of the workforce.

Omani citizens enjoy a high degree of protection, making labor dispute resolution very difficult and lengthy.  Both the Ministry of Labor (MoL) and the courts have broad powers to reinstate Omani national employees or mandate a severance package that provides pay for several months or, in some cases, several years.  Foreign workers may also appeal termination to the MoL but they have less legal protection than Omani nationals.

While unions are allowed to operate in the private sector, they are not very influential and do not engage in collective bargaining.  Most unions only exist to ensure that employers provide government-mandated benefits to employees, such as required annual raises.  Workers generally direct appeals for wage increases to the government.  During the Arab Spring protests in 2011, the government passed a law increasing worker benefits.

In May 2021, unemployed young Omanis protested in front of MoL offices in numerous cities, though not in Muscat, over job layoffs and unemployment. The largest was in the port city of Sohar, where Omani security forces dispersed protesters with tear gas and arrests. The demonstrations were the first significant protests under Sultan Haitham. Several small-scale protests over the lack of jobs, inadequate unemployment benefits, and recruitment policies have occurred outside MoL headquarters in Muscat and Salalah in past years.  The Omani government takes public concern about unemployment very seriously.

Oman is a member of the International Labor Organization (ILO).  Oman has ratified four of the eight core ILO standards, including those on forced labor, abolition of forced labor, minimum working age, and the worst forms of child labor.  Oman has not ratified conventions related to freedom of association, collective bargaining, equal remuneration, or the conventions related to the elimination of discrimination with respect to employment and occupation.

The issue of forced labor remains a problem in Oman, but the government continues to demonstrate increasing efforts to combat trafficking in persons.  Expatriate workers can switch employers upon completion or termination of their employment contracts without the need to obtain a “no-objection” certificate (NOC) from their current employers. Government guidelines in place since 2020 bolster Omani nationals’ employment and authorize the termination of expatriate laborers in response to the economic slowdown.  Oman’s new labor law, initially expected to be issued in April 2021, is delayed. Government officials have not shared publicly the contents of any proposed draft.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics  

According to the Oman’s National Centre for Statistics and Information (NCSI) — the only host-country source of foreign direct investment (FDI) data — total FDI in the Sultanate through the third quarter of 2021 was RO 16.43 billion, representing a 5.6-percent increase over the same period in 2020. FDI inflow at the end of the third quarter of 2020 stood at RO 0.88 billion ($2.29 billion). The United Kingdom remains by far the biggest investor in FDI (RO 8.3 billion – $21.6 billion), followed by the United States (RO 2 billion – $5.2 billion), UAE (1.2 billion – $3 billion), Kuwait (RO 914 million – $2.4 billion), and China (RO 773.4 million – $2 billion).

Major foreign investors that have entered the Omani market that include SV Pittie Textiles (India), Moon Iron & Steel Company (India), Sebacic Oman (India), BP (UK), Sembcorp (Singapore), Daewoo (Korea), LG (Korea), Veolia (France), Huawei (China), SinoHydro (China), DEME (Belgium), ACME Group (India), Equinix (United States), Oracle (United States), and Vale (Brazil).

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source* USG or international statistical source USG or International Source of Data:  BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2020 $73,886 2020 $64,648 www.worldbank.org/en/country
Foreign Direct Investment Host Country Statistical source* USG or international statistical source USG or international Source of data:  BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2021 N/A 2020 197 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2020 -18 BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data
Total inbound stock of FDI as % host GDP N/A N/A 2020 56.1 UNCTAD data available at

https://unctad.org/en/Pages/DIAE/World%20Investment%20Report/Country-Fact-Sheets.aspx  

* Source for Host Country Data: National Centre for Statistics and Information (NCSI). 

Table 3: Sources and Destination of FDI 
Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment* Outward Direct Investment**
Total Inward 42,739 100% Total Outward 16,764 100%
United Kingdom 21,662 51% UAE 1,099 N/A%
USA 5,247 12% Saudi Arabia 288 N/A%
UAE 3,087 7% India 205 N/A%
Kuwait 2,2,378 6% United Kingdom 77 N/A%
China 2,011 5% Kuwait 77 N/A%
“0” reflects amounts rounded to +/- USD 500,000.

*Source for Host Country Data: National Centre for Statistical Analysis, 2021 Q3 (Inward). **2017 Q4 (Outward).  Data on Oman from the IMF’s Coordinated Direct Investment Survey is not available.

14. Contact for More Information 

Economic & Commercial Officer
U.S. Embassy, P.O. Box 202, Postal Code 115, MSQ, Muscat, Sultanate of Oman
+968-2464-3623, muscatcommercial@state.gov 

Investment Climate Statements
Edit Your Custom Report

01 / Select A Year

02 / Select Sections

03 / Select Countries You can add more than one country or area.

U.S. Department of State

The Lessons of 1989: Freedom and Our Future